Tags: My Family Heritage EssayCustom Essay Station ReviewsProblem Solving Through ProblemsPast Participle French EssayerChild Abuse Essay OutlineSample Trucking Business PlanEmail Advantages Disadvantages Essay
Third, the expansion of resource capacity which accounts for potential growth does not imply an increase in actual growth as there is underemployment or unemployment which means that the production capacity has not increased in the short-run.This will mean that the production capacity is unable to produce more goods and services to satisfy the excessive wants.Improvement in research and development will raise productivity to increase production while the employment of more resources for production will both raise the level of output, allowing greater consumption of goods and services without reducing the consumption of other goods and services.
In conclusion, it must be noted that the problem of scarcity can never be eradicated as long as wants are unlimited and resources are limited but a short term rise in economic growth will enable the increase in production will help to alleviate the problem of scarcity.
What is the difference between Economic Growth and Development?
However, when we take a longer and dimensional discussion of the issue, it is quite impossible to eliminate the problem of scarcity when there is economic growth.
First, it is difficult to reduce the unlimited wants that are created by growth in population and greater affluence of the society as developing countries like India and China attain higher level of income.
Initial low levels of inequality are associated with more negative elasticities of poverty reduction concerning growth.
Higher initial inequality results in less effect on poverty with an increase in economic growth.
Application of the concept of opportunity cost is required to answer this essay question.
Economic growth refers to the growth of the resource and production capacity which is measured in actual or potential capacity.
Second, market imperfection and inefficiency will occur which may lead to misallocation of resources which implies that some of the resources are not able to create the optimal level of production to meet the rise in demand.
Furthermore, the lack of perfect market information and lack of mobility in the distribution of resources and goods and services will mean that some groups of people in the economy may not be able to attain the resources and goods and services and thus, the problem of scarcity continues to prevail.